I didn’t even think about estate planning until I had my daughter. That was nearly two years ago. I recently made an appointment for me and my husband to meet with an estate planning attorney. Maybe it is because I used to think only the wealthy did things like that. I’m learning if you have a child, you need to do it now. Colorado Springs estate planning attorney Beth Sparks broke down the top things to consider.
This includes your will and power of attorney. A will determines how your estate will be managed after your bills and taxes are paid; otherwise the state will decide for you. The will also gives you a chance to name a guardian for your minor children. “Pick a guardian who you trust with your money and with your kids,” Sparks said.
You also need a financial and health care power of attorney who will make the financial and health care decisions if you are unable to do so.
You’ve probably designated who you want to inherit your life insurance policies, 401(k) plans, IRA accounts and other holdings. Check them and keep them updated. It may seem silly, but make sure you don’t have them in the name of a former spouse, or a deceased relative. Sparks said one of the biggest mistakes people make is making a minor child a beneficiary.
“If you name a minor child as beneficiary then you waste all the money you’ve spent on estate planning,” Sparks said, “It doesn’t go into his/her trust that you have spent time and money creating with your attorney.” It goes to the court, and the court determines who manages it.
Sparks said a trust is an agreement between an asset holder (you) and a trustee (the person you choose), to manage and distribute those assets, for the benefit of a beneficiary or beneficiaries. It basically makes sure your legacy is protected from an heirs’ creditors or money mismanagement by an heir.
“A trust for a child/children is a contract that says I want this person to manage the money and pay it out for these reasons,” Sparks said.
The bottom line is estate planning isn’t simple business. I had to call on the advice of an experienced estate planning attorney to understand the basics.
At least I know now our wishes will be carried out and our daughter will be protected.